Averaging below 4 percent, current mortgage rate estimates make it a great time to be in the market to buy a house. However, those who are selling are more favorably positioned than individuals interested in purchasing, a newly released study suggests.
This was particularly evident as the first quarter drew to a close. In March, sellers sold properties for approximately $30,500 more than they purchased, according to new numbers detailed by residential real estate information firm RealtyTrac. Up 17 percent on a year-over-year basis, the last time home sellers realized a larger profit was prior to the housing meltdown, specifically in December 2007.
"Home price gains are reaching bubble territory."
Some of the largest increases in price growth were out west, particularly California. In the Golden State, sellers in San Francisco saw a 72 percent uptick in value versus buyers, 60 percent in San Jose, 53 percent in Boulder, Colorado and 51 percent in Prescott, Arizona.
Median priced home in San Jose nearly $950,000
California is consistently among the states with the most-expensive asking prices in the U.S., especially in major metropolitan areas. For example, buyers who use free house price estimates online know San Jose home prices run higher than any other metro. In San Jose, the median during last year's fourth quarter was $940,000 among single-family residences, according to the most recent numbers from the National Association of Realtors.
Daren Blomquist, RealtyTrac senior vice president, noted people who have been contemplating putting their property up for sale shouldn't dilly-dally.
"Home sellers in many markets are now seeing average price gains close to or above what home sellers experienced during the last housing boom," Blomquist explained. "That should encourage more homeowners to take advantage of the prime seller's market and list their homes for sale this year."
Listings still limited
Robert Dietz, chief economist for the National Association of Home Builders, said it's only a matter of time before more projects get underway.While sellers are at a distinct advantage, it hasn't translated to growth in listings though the first few months of 2016. Newly constructed homes have been slow to respond as well. In March, housing starts decreased nearly 9 percent to a seasonally adjusted annual rate of 1.1 million, based on estimates from the U.S. Department of Commerce. Permits also slipped, falling by almost 8 percent compared to the previous month. The last time the home building pace was slower was last October, according to The Wall Street Journal.
"Single-family starts are off from their strong showing in February but this slowdown represents a return to a long-run, gradual growth trend that is consistent with builder confidence levels, which are overall positive," Dietz said.
"Inventory levels are low due to slow-moving housing starts."
Even though sellers have the upper hand in most markets, there were a handful of markets in March where buyers had the better end of the deal. The prime example was Rockford, located in northern Illinois. The average house there in March sold for approximately 11 percent less than its initial purchase price, RealtyTrac reported. For several three-month stretches, Rockford has had one of the lowest median existing single-family price points for buyers in the country at $86,100, according to NAR's latest quarterly report on metro home prices. The only metro where buyers spent less was in the Youngstown-Warren-Boardman area of Ohio.
Overall, only 15 percent of markets in March favored buyers, based on RealtyTrac's figures. Similarly, February saw home price growth nationwide, increasing nearly 7 percent compared to the same period in 2015, according to data analytics firm CoreLogic.